'Fiscal Cliff' Has Many Perils

CBO Warns of Recession, or More Big Deficits, Depending on Congressional Action

By

Damian Paletta and

Sara Murray

Updated Aug. 22, 2012 7:20 p.m. ET

WASHINGTON—The U.S. economy likely would slide into a "significant recession" next year if Congress doesn't avert tax increases and spending cuts set to begin in January, the Congressional Budget Office said Wednesday.

But if they are postponed for at least a year, the federal government faces the prospect of a fifth straight year...